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An updated clause in Sony's terms and conditions for its PSN service, which has caused uproar amongst gamers because it appears to ask users to forgo their rights to participate in class action lawsuits against Sony in perpetuity, is largely designed to protect against suits in the US, says Sheridans partner and specialist interactive entertainment lawyer Alex Chapman.

The updated contract features an entirely new paragraph 15, which advises that acquiescence to the contract means that:

"If you have a Dispute with any Sony Entity or any of a Sony Entity's officers, directors, employees and agents that cannot be resolved through negotiation within the time frame described in the 'Notice of Dispute' clause below.

"Other than those matters listed in the Exclusions from Arbitration clause, you and the Sony Entity that you have a Dispute with agree to seek resolution of the Dispute only through arbitration of that Dispute in accordance with the terms of this Section 15, and not litigate any Dispute in court. Arbitration means that the Dispute will be resolved by a neutral arbitrator instead of in a court by a judge or jury."

Given Sony's recent problems with customer relations following the PSN security breach, the wording is perhaps not the wisest, but Chapman believes that Sony is making an essential balance between protecting itself from litigation and appeasing already upset customers.

"Whilst this may not be popular with consumers it is really nothing more than any sensible business would do after it has learned some lessons through what must have been a very difficult experience," Chapman told GamesIndustry.biz in an exclusive statement.

"I remember when the GTA Hot Coffee incident hit the news. Overnight all the publishers seemed to change their dev/pub agreements to include new language concerning hidden content. In that way terms and conditions and contracts often act as a barometer of what is going wrong in an industry and this case is no different.

"Sony is clearly balancing the risk of adverse consumer reaction against the risk of facing future class actions. Time will tell whether consumers care enough about not being able to bring a class action to give up PSN access.

What's more, the extensive caveat which Sony applies to the end of the clause, detailing the fact that it may be legally inadmissible, either wholly or in part, means that the publisher is likely to be directing the section at customers in the US. The law, says Chapman, is unlikely to be enforceable in the UK.

"From a legal point of view there is no certainty that this language will have any effect," Chapman continues.

"The applicable law for the kind of disputes that consumers may bring will generally be governed by the country in which the consumer is resident. In the UK it is not unlikely that this would be considered unenforceable under the Unfair Contracts Terms Act.

"However it is probably not the UK that Sony is worried about but the USA where class actions are more common place and the system can mean that defending those actions can be so time consuming and expensive that it is more cost effective to settle even spurious claims."

This only shows that the law regarding class-action lawsuits in the US should be partly rewritten to perclude such legal hoops. If a law creating a right allows people to give up such a right through a contract (such as the PSN Terms of Service), there is a problem with the law.

Moreover, a judicial system in which disputes between a customer and a corporation can be restricted to arbitration just if a contract says so... is obviously broken.

Thing is, I'm pretty sure that this could be a "dangerous" move on behalf of the software industry. Why? Because if this is ever tested in court it could blow down the fallacy of legally binding click-through wrappers if it's found that you cannot override innate legal rights. Sure, all click-through wrappers have that blurb at the end that says something along the lines of "this has no effect on your rights regardless of what is stated herein" but that's just a cop-out because the threat is there that might discourage a lot of people seeking legal remedies if they are wronged by Sony..... IMO, this could be interesting and finally get rid of the utter crap that goes on in EULAs.

It's brilliant - I'm currently drawing up my own contract with Sony that states that when I agree with their new contract, they agree to the terms and conditions I've drawn up in opposition. I'm assuming it'll just as fair and enforcable.

I'd recommend everyone creates one for themselves.

Edited 1 times. Last edit by Marty Greenwell on 18th September 2011 2:30pm